For point 4, I'd like to add that the player would surely have a preference for discarding stolen goods instead of owned ones wherever possible. For example:

If you're poisoning someone or giving them a live grenade, then there's no reason not to use the stolen one.

If it's just someone's sweetroll and you're giving it to someone else so they have a nice surprise snack when they check their bag (or some other totally arbitrary reason and item) it shouldn't make much difference that it's stolen.

If you're trying to put something in another NPC's inventory because you know you're about to be searched by guards but the other NPC won't be, you'd want to get rid of the stolen one.

If you're trying to frame an NPC for a crime like in Skyrim's first Thieves Guild quest, you most certainly want to reverse pickpocket the stolen one.

Even if some of these aren't applicable to vanilla Morrowind, there's certainly scope for mods to want this behaviour.

Wow, there was something going on that completely escaping my attention. I am also not particularly qualified to make a decision on this issue, because I never have uses pickpocket once in any TES game.

However reverse pickpocketing is a pretty drastic change from the original and if we think hard enough about this issue we can probably come up with a heavily scripted quest or feature that would be broken by allowing reverse pickpocketing. So my initial reaction to this for pre-1.0 would be a no.

If at all then it would have to be locked away behind an openmw.cfg fallback setting that could then be later folded into the de-hardcoded pickpocketing feature post-1.0. But I am not in favour of this and trying to push it with these changes into 0.43.0 on such short notice seems ill-advised.

@Capostrophic: A fallback setting would (maybe) have allowed for automatically re-using the setting for reverse pickpocketing in post-1.0 OpenMW. Anyway, I would have to take a closer look at that PR again (weirdly titled) and we would definitely also get scrawl's input on that, but I am still not inclined to merge it. After 1.0 the weight/cost change would have to be thrown out anyway. Seems a bit like a waste of time.